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Merrill Cuts Rating on Inktomi, Shares Continue Tumbling


Shares of



continued losing ground today, and

Merrill Lynch

analyst Henry Blodget downgraded the stock, citing "continued evidence of a slowdown" in Internet-related capital spending.

Inktomi, Foster City, Calif., lately lost $4.50, or 25.2%, to $13.44 in trading on the


. The shares have traded as low as $13.25 today, easily breaking through the 52-week low of $17. The high for the year is $241.50.

In his research note, Blodget cut his intermediate-term rating on Inktomi to accumulate from buy. He didn't change his full-year 2001 earnings forecast of 30 cents a share, but reiterated his earlier warning that Inktomi's 2001 consensus estimates "seemed challenging" and the company "would need explosive growth from international customers as well as emerging segments and broadband deployments in the U.S." Twenty-four analysts polled by

First Call/Thomson Financial

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are estimating 2001 earnings of 29 cents a share, compared with earnings of 11 cents a share in fiscal 2000.

Blodget also said his confidence in the earnings estimates for Inktomi has been "further reduced" by a Dec. 28 earnings warning from

F5 Networks

(FFIV) - Get F5 Networks, Inc. Report

and preannouncements by other Internet equipment vendors.

Blodget, however, maintained his long-term buy rating on the Internet infrastructure supplier, saying he believes "Inktomi is a strong company that remains well-positioned for long-term growth."

This morning,

Robertson Stephens

cut its investment rating on Inktomi and a host of other Internet infrastructure companies, citing a significant slowdown in Internet technology purchases in the first half of 2001, as well as the absence of large information technology investments. Inktomi was punished last week when a

Bear Stearns


downgraded the stock, blaming the effects of a slowing economy.